The UK Energy Environment, Post Brexit: A Tell-Tale for the U.S.?

Last week, politics in the United States took an unexpected tack when Donald Trump’s unlikely bid for the presidency concluded with the candidate taking a majority of the electoral college points. Heads are still spinning in many industries, and the renewable energy sector is no exception.

While many renewable markets have developed an increasing immunity to politics, it is too early to say for certain what the implications of presidential-elect Trump will be. Nearly five months ago, the UK was dealt a similar government shake-up in the form of the Brexit vote — the world was shocked when 52 percent of UK citizens elected to leave the European Union which, much like in the US, ushered in an alternative style of conservative leadership and a lot of questions about the future. In this case, we have gained the luxury of some hindsight.

Perhaps the only silver lining is that renewable electricity production is still expected to meet its goals; failure to reach this overall target is largely due to shortcomings in the less politically immune (read economically viable) sectors of heating and transportation.

That said, Brexit has still taken a toll on investment renewable energy generation, overall.

Recently, the UK fell behind Morocco to number 14 on the Renewable Energy Country Attractiveness Index. Right or wrong, investors do not see UK renewables as being low-risk. At the moment, it is hard to blame them — The country’s energy ambitions are in chaos, and the leadership has shown no interest in even the most competitive forms of renewables.

So, where has leadership shown interest? Nuclear. Depending on your personal views, you may or may not consider this to be a renewable energy source — Either way, the UK government has spurned some 300,000 petitioning citizens to push the first nuclear facility in decades. The Hinkley Point facility will cost 18 billion pounds and provide the UK with 7 percent of its electricity needs.

Aside from environmental concerns, opponents worry about the project’s Chinese partners and its 35 year PPA at rates that are roughly three times the current wholesale price. Additionally, Brexit causes apprehension over the enforceability of the Euratom Treaty on nuclear energy, which has long enforced safeguards during construction of new nuclear in Europe.

Five months after Brexit, it is safe to say that the UK energy market is in a bit of turmoil; The Department of Energy and Climate Change has been axed. Less proven renewable energy has been hamstrung, more proven technology has lost investor confidence and a highly contested nuclear project appears have been green lit. In light of last week’s US election, it’s hard not to wonder whether this is a good bellwether for the United States.

The likely answer is yes. While this sounds a bit hopeless, perhaps we would be better off wondering is whether the last five months will even be a good bellwether for the energy future of the United Kingdom, on a longer time scale.

Five months is not a lot of time for things to settle out from a shakeup such as the UK saw with Brexit or the US is about to see from a Trump administration. Wind and solar are already competitive, and less tried renewable technologies get more and more viable every day. Remember, it is very hard to fight economics. Right now things seem upside down, but that is only because they are. If both the UK and the US are willing to hold fast, there are good reasons to believe that the ship can right itself.